U.S. limits offshore drilling, for now

Plans lease sales in already developed areas

By

SteveGelsi

NEW YORK (MarketWatch) -- The federal government on Wednesday said it would keep the eastern Gulf of Mexico and the Atlantic off limits for oil and gas exploration for now, while planning fresh lease sales in areas already under development.

In its first major oil-lease announcement since the Deepwater Horizon oil spill that began last April and ended in September, Interior Secretary Ken Salazar said the oil and gas industry already holds about 29 million acres of offshore leases in undeveloped areas where it’s now allowed to explore for new sources of fossil fuel.

Salazar canceled plans first disclosed in March to allow some oil and gas leases in the eastern Gulf of Mexico, since many of those regions now fall under a congressional moratorium against offshore drilling, he said.

Areas in the mid and south Atlantic, “are no longer under consideration for potential development through 2017,” the administration said.

The U.S. delayed lease sales from March in the western and central Gulf of Mexico but will still hold an auction by the end of next year or early 2012, he said.

The Cook Inlet and the Chukchi and Beaufort Seas in the Arctic will continue to be considered for potential leasing before 2017. One proposal from Royal Dutch Shell
RDS.A, +1.48%
for an exploratory well in the region remains under consideration, he said.

“As a result of the Deepwater Horizon oil spill we learned a number of lessons, most importantly that we need to proceed with caution and focus on creating a more stringent regulatory regime,” said Salazar. “As that regime continues to be developed and implemented, we have revised our initial March leasing strategy to focus and expend our critical resources on areas with leases that are currently active.”

The decision drew a critical response from the American Petroleum Institute, a leading lobbying group for the oil and gas industry.

The group said the move, “shuts the door on new development off our nation’s coasts and effectively ensures that American jobs will not be realized.”

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